Industry analysts anticipate that the agreement will enhance Reliance’s standing in India’s highly competitive video streaming industry.
Reliance Industries’ highly anticipated joint venture with Walt Disney Co., merging the operations of Viacom18 and Star India, is poised to significantly strengthen the conglomerate’s presence in India’s second-largest internet market, particularly in the realm of video streaming.
Upon completion of the deal, Reliance Industries will become the sole owner of two major streaming platforms in India: Disney+ Hotstar, the leader in the country’s subscription-based video streaming market with 38.3 million subscribers, and JioCinema, a key player in the ad-supported video streaming sector.
As of September 30, 2023, JioCinema boasted approximately 237 million monthly active users, including 33 million daily active users, according to data from the service’s website.
On February 28, Reliance Industries announced its intention to merge the digital streaming and television assets of both companies in India, with the aim of creating a “world-class” leader in entertainment and sports.
Post-merger, the combined entity is projected to have a valuation of Rs 70,352 crore ($8.5 billion) on a post-money basis. Reliance Industries will hold a controlling stake in the entity and has committed to investing Rs 11,500 crore ($1.4 billion) to support its growth strategy.
Nita Ambani, the founder and chairperson of Reliance Foundation, is slated to assume the role of chairwoman for the joint venture (JV). Meanwhile, Uday Shankar, co-founder of Bodhi Tree Systems and a former Disney India executive, is set to serve as the vice-chairperson.
India’s burgeoning streaming market is poised for significant shifts with the Reliance joint venture deal, analysts suggest, as it is expected to provide Reliance with a competitive edge in the fiercely competitive landscape. This landscape includes both domestic and international rivals such as Netflix, Amazon Prime Video, ZEE5, and Sony LIV.
Sony’s decision to call off the merger of its India unit with Zee Entertainment in January, after protracted deliberations spanning over two years, underscores the dynamic nature of the market.
Karan Taurani, Senior Vice President at Elara Capital, emphasized the value-centric nature of the Indian market, where consumers prefer bundled offerings. With JioCinema and Disney+Hotstar joining forces, they are poised to offer a comprehensive package encompassing movies, sports, and a global content catalog. Taurani anticipates that this bundled offering, likely to be introduced as a premium plan, will attract a broad consumer base given Reliance’s extensive reach through Jio’s infrastructure and customer base.
Taurani further noted that global streaming services might face challenges if JioCinema continues to offer free content, potentially impacting platforms like Netflix and Amazon Prime Video negatively.
The joint venture arrives amidst a surge in digital content consumption across the nation.
According to a recent report by the Internet and Mobile Association of India (IAMAI) and Kantar, approximately 707 million Internet users, constituting around 86 percent of India’s internet user base, engage with video and audio streaming services, marking it as the foremost use case for internet consumption in the country.
This growth is propelled by the increased adoption of smart television sets and streaming devices like Google’s Chromecast and Amazon’s Fire TV. Notably, the report highlights that a larger number of individuals access video content via internet-only devices compared to traditional linear television. Specifically, around 208 million users consume video content through internet-only devices, surpassing the 181 million users accessing content via linear TV.
JioCinema, as per its website, boasts approximately 125 million monthly active users on connected television devices alone.
The amalgamation of Viacom18 and Star India within the joint venture equips it with the capability to offer a diverse range of local and global entertainment content, along with live-streaming sports services, providing consumers with a seamless and affordable entertainment experience.
Furthermore, the joint venture secures exclusive rights to distribute Disney films and productions in India, along with licensing access to over 30,000 Disney content assets.
Utkarsh Sinha, managing director at Bexley Advisors, underscores the burgeoning consolidation trend in India’s media landscape, identifying it as a significant opportunity amidst a plethora of consumer choices. He anticipates this consolidation wave to persist for the next 2-3 years, allowing survivors to capture a larger portion of the media and entertainment market.
Reliance’s strategic content partnerships have been instrumental in enhancing JioCinema’s offerings and expanding its subscriber base through various initiatives, including the launch of a paid subscription service.
One notable collaboration occurred in June 2022 when Viacom18 secured streaming rights for the IPL tournament for the 2023-2027 period. As a result, JioCinema streamed the entire tournament for free last year, attracting a staggering 32 million simultaneous viewers during the IPL 2023 final match in May 2023. While this achievement set a world record at the time, it was later surpassed by Disney+ Hotstar during the ICC World Cup 2023, garnering 59 million concurrent viewers in November 2023.
Additionally, Viacom18 inked deals with media giants Warner Bros. Discovery and NBC Universal, positioning JioCinema as the exclusive streaming platform for their esteemed content brands, including HBO, Warner Bros., Universal Television, Universal Pictures, and Dreamworks Animation.
Recognizing the significance of kids’ entertainment, Reliance secured a deal with Pokemon Co. to feature over 1,000 episodes and approximately 20 movies from the popular Japanese anime series Pokemon on JioCinema.
Meanwhile, Disney has been evaluating options for its India business following its acquisition of 21st Century Fox in 2019. Disney CEO Bob Iger expressed a desire to maintain a presence in the market while seeking opportunities to strengthen the company’s position and improve profitability, particularly within its streaming business.
The joint venture between Reliance and Disney will consolidate approximately 120 channels, encompassing entertainment channels such as Colors, Star Plus, and Star Gold, along with sports channels like Star Sports and Sports18. With an anticipated viewership of over 750 million across India and the Indian diaspora, the JV is poised to significantly influence the Indian media landscape.
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